FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from______to______
Commission File Number 0-18528
INCOME GROWTH PARTNERS, LTD. X
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0294177
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11300 Sorrento Valley Road, Suite 108, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(619) 457-2750
(Registrant's telephone number, including area code)
Former fiscal year ended December 31, 1995
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days. Yes [X] No [ ]
The number of the registrant's Original Limited Partnership Units
outstanding as of May 7, 1996 was 18,826.5. The number of the
registrant's Class A Units outstanding as of May 7, 1996 was 8,100.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31, December 31,
1996 1995
___________ ___________
(Unaudited)
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 7,778,365
Buildings and improvements 23,411,736 23,410,664
___________ ___________
31,190,101 31,189,029
Less accumulated depreciation and impairments (9,943,964) (9,735,490)
___________ ___________
21,246,137 21,453,539
Other assets:
Cash and cash equivalents 234,298 153,735
Prepaid expenses and other assets 618,133 546,594
___________ ___________
852,431 700,329
___________ ___________
$22,098,568 $22,153,868
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $19,952,519 $19,966,935
Other liabilities:
Accounts payable and accrued liabilities 207,052 131,169
Accrued interest payable 124,106 58,506
Security deposits 175,212 165,201
Loan payable to affiliate 102,000 102,000
Accrued property taxes 59,943 -
___________ ___________
20,620,832 20,423,811
Commitments
Partners' capital 1,487,736 1,740,057
Note receivable from general partner (10,000) (10,000)
___________ ___________
$22,098,568 $22,153,868
=========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the three months ended:
Mar 31, 1996 Mar 31, 1995
_____________ _____________
<S> <C> <C>
Revenues:
Rents $ 844,827 $1,012,219
Other 35,343 64,576
_____________ _____________
Total revenues 880,170 1,076,795
_____________ _____________
Expenses:
Interest 395,031 526,401
Operating expenses (excluding
depreciation and amortization) 524,915 544,660
Depreciation and amortization 212,544 296,230
_____________ _____________
Total expenses 1,132,490 1,367,291
_____________ _____________
Net loss (252,320) (290,496)
============= =============
Net loss per limited
partnership unit $ (9.37) $ (15.43)
============= =============
Weighted average limited
partnership units outstanding 26,926 18,826
============= =============
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31
(UNAUDITED)
<CAPTION>
1996 1995
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net tenant revenues $ 878,200 $1,076,231
Security deposits (refunded) retained 10,011 2,283
Cash paid to suppliers and employees (464,700) (525,812)
Interest received 1,971 564
Interest paid (329,431) (526,401)
___________ ___________
Net cash provided by operating activities 96,051 26,865
___________ ___________
Cash flows from investing activities:
Purchase of land, buildings, and equipment (1,072) -
___________ ___________
Net cash used in investing activities (1,072) -
___________ ___________
Cash flows from financing activities:
Amounts due to affiliates, net (14,416) (7,321)
___________ ___________
Net cash used in financing activities (14,416) (7,321)
___________ ___________
Net increase in cash 80,563 19,544
Cash and cash equivalents at beginning of period 153,735 180,696
___________ ___________
Cash and cash equivalents at end of period $ 234,298 $ 200,240
=========== ===========
Reconciliation of net loss to net cash
provided by operating activities:
Net loss $ (252,320) $ (290,496)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 212,544 296,230
Other, primarily changes in
other assets and liabilities 135,827 21,131
___________ ___________
Net cash provided by operating activities $ 96,051 $ 26,865
=========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(UNAUDITED)
1. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements of Income
Growth Partners, Ltd. X, a California Limited Partnership, and Subsidiary
(the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and note disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to those rules and regulations, although
the Partnership believes that the disclosures made are adequate to make the
information presented not misleading. These consolidated financial
statements should be read in conjunction with the financial statements and
the notes thereto included in the Partnership's latest audited financial
statements for the year ended December 31, 1995 filed on Form 10K. These
financial statements have not been audited by independent public
accountants, but include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of the general partners, necessary
for a fair presentation of the financial condition, results of operations
and cash flows for periods presented. However, these results are not
necessarily indicative of results for a full year. Certain prior period
amounts have been reclassified to conform with the current period
presentation.
The accompanying financial statements have been prepared on a going concern
basis which assumes continuity of operations and realization of assets and
liquidation of liabilities in the ordinary course of business. As a result
of the Partnership's continuing high levels of mortgage indebtedness, there
are significant uncertainties relating to the ability of the Partnership to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary as a result of the outcome of the
uncertainties discussed herein.
2. Activities of the Partnership
The Partnership continued operations pursuant to its Plan of Reorganization
during the first quarter of 1996. As discussed previously, the Partnership
emerged from its Chapter 11 Reorganization in May 1995, having raised
sufficient additional capital to retain two of its three original
properties. The third property was foreclosed on by its lender in August
1995. In December 1995 the Partnership refinanced its Mission Park
property, taking advantage of an opportunity to reduce the principal
balance of the loan and lower monthly debt service payments.
3. Contingencies
Activities of the General Partners
One of the general partners of the Partnership also serves as the general
partner in several other real estate partnerships. To the extent that the
operation of these partnerships requires significant financial resources of
the general partner or adversely affects the liquidity of the general
partner, the general partner's ability to operate and/or manage the affairs
of the Partnership could be impaired.
Property Leverage Levels
A certain provision of the Partnership Agreement stipulates that
indebtedness not exceed 40% of a property's purchase price as of the
completion of the initial offering. However, the foregoing limit on
indebtedness does not apply in the case of refinancing where up to 80% of
the value of the property may be encumbered by indebtedness. The aggregate
indebtedness on the Partnership's properties equaled approximately 65% of
the purchase prices as of March 31, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the Financial
Statements and Notes thereto filed herewith.
a. Liquidity and Capital Resources
Historically, the Limited Partnership was dependent upon proceeds from the
sale of Original Units to meet its obligations, including debt service
requirements. In 1992 the Limited Partnership discontinued sales of
Original Units, and between 1992 and 1995 the Limited Partnership's primary
source of liquidity was from cash generated from operations. On May 2,
1995, the Limited Partnership's Plan of Reorganization became effective and
after all fundraising efforts were complete, the Limited Partnership had
received approximately $2,025,000 in additional capital from Class A Unit
sales to fund the Plan. After paying the creditors as outlined in the
Plan, the Limited Partnership set aside a portion of remaining proceeds of
the new offering in a cash reserve account to provide liquidity for short
term negative cash flows. In December 1995 the Partnership successfully
refinanced the Mission Park Property. In order to complete the refinancing
the Partnership had to use cash reserves to pay off the outstanding past-
due property taxes and cover loan origination fees and refinancing costs.
As of March 31, 1996 the Partnership had approximately $234,000 in cash and
cash equivalents.
Although the Partnership successfully refinanced its Mission Park property
at a fixed annual interest rate of 7.76%, it remains sensitive to interest
rates because the Shadowridge Meadows property remains highly leveraged.
The interest rate on the Shadowridge Meadows mortgage adjusts monthly with
the 11th District Cost of Funds Index. Between May 1994 and May 1996,
increases in the 11th District Cost of Funds Index totaling 1.245% have
been announced. If the 11th District Cost of Funds index continues to
increase more rapidly than projected, and the Partnership is unable to
raise rents at Shadowridge Meadows to cover the increased debt service
payments, the Partnership may have to fund shortfalls from reserves.
Furthermore the existing loan on Shadowridge Meadows is currently scheduled
to expire in July 1998. If the real estate and financing markets have not
improved sufficiently for the Partnership to refinance this property by
that time, the Partnership may have to restructure the existing loan, file
another bankruptcy petition, sell the property, or risk losing the property
to foreclosure.
Mortgage indebtedness on the properties remains high, despite the
Partnership's success at curing and reinstating the loans, disqualifying
penalty interest and fees, making principal reduction payments, and
obtaining debt forgiveness from refinancing. This mortgage indebtedness
makes it difficult for the properties to service their debt through
Partnership operations.
In the event that one or more of the properties is unable to support its
debt service and the Partnership is unable to cover operational shortfalls
from cash reserves, the Partnership may have to take one or more
alternative courses of action. The general partners would then determine,
based on their analysis of relevant economic conditions and the status of
the properties, a course of action intended to be consistent with the best
interests of the Partnership. Possible courses of action might include,
the sacrifice of one or more of the properties to reduce negative cash
flow, the sale or refinancing of one or more of the properties, the entry
into one or more joint venture partnerships with other entities, or the
filing of another bankruptcy petition.
b. Results of Operations
The Partnership had been operating the Shadowridge Meadows Apartments and
Mission Park Apartments for approximately 88 months and 79 months
respectively at March 31, 1996. The Shadowridge Meadows Apartments and
Mission Park Apartments reflected occupancy rates of 94% and 98%
respectively as of March 31, 1996, compared to 95% and 89% respectively as
of March 31, 1995.
Total revenues for the three month period ended March 31, 1996 decreased
approximately $167,392 compared to the same period in 1995 due to the
foreclosure of the Margarita Summit property in August 1995. Operating
expenses, excluding depreciation and amortization, for the three month
period ended March 31, 1996 decreased approximately $20,000 compared to the
same period in 1995. This was the combined result of the foreclosure of
the Margarita Summit property and the elimination of related operating
expenses, and increased refurbishment expenses during the first quarter of
1996. Interest expense decreased approximately $131,000, and Depreciation
and amortization expense decreased approximately $84,000 for the three
month period ended March 31, 1996 compared to the same period in 1995,
primarily due to the foreclosure of Margarita Summit.
In the past the Partnership experienced losses from operations primarily
due to the high degree of debt service on its mortgage loans. Management
estimates that the Partnership may experience continued operating losses in
the future from its Shadowridge Meadows property unless debt service can be
restructured or reduced.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings which may have a material adverse
effect on the Partnership. However, the Partnership is involved in small
claims court proceedings against certain present or former tenants of its
apartment complexes with regard to landlord-tenant matters, all of which
are considered to be in the ordinary course of its business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 14, 1996
INCOME GROWTH PARTNERS, LTD. X,
a California Limited Partnership
By: Income Growth Management, Inc.
General Partner
By: /s/ Timothy C. Maurer
_______________________________
Timothy C. Maurer
Principal Financial Officer AND
Duly Authorized Officer of the Registrant
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Location
___________ ___________________________________________________ ________
27.2 Financial Data Schedule Attached
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements filed with the Registrant's Form 10-Q for the quarter
ended March 31, 1996 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 234,298
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 852,431
<PP&E> 31,190,101
<DEPRECIATION> (9,943,964)
<TOTAL-ASSETS> 22,098,568
<CURRENT-LIABILITIES> 668,313
<BONDS> 19,952,519
0
0
<COMMON> 0
<OTHER-SE> 1,477,736
<TOTAL-LIABILITY-AND-EQUITY> 22,098,568
<SALES> 0
<TOTAL-REVENUES> 880,170
<CGS> 0
<TOTAL-COSTS> 524,915
<OTHER-EXPENSES> 212,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 395,031
<INCOME-PRETAX> (252,320)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (252,320)
<EPS-PRIMARY> (9.37)
<EPS-DILUTED> 0
</TABLE>
